Bankrupt crypto exchange, FTX, is preparing to distribute over $1.2 billion to its users. The repayments are part of a restructuring plan approved in October 2024, which outlines that users owed up to $50,000 in digital assets must complete their repayment requirements by January 20, 2025.
According to Sunil, a prominent FTX creditor and member of the FTX Customer Ad-Hoc Committee, repayments are unlikely to begin until after this deadline. “FTX has given until Jan. 20 to fulfil pre-distribution requirements for the initial distribution. Repayments likely won’t start before then,” he said in a recent statement.
The plan promises that approximately 98% of users will receive 119% of their declared claims. However, the repayment model has sparked debate, as it values claims based on crypto prices at the time of FTX’s bankruptcy ie in November 2022. Since then, Bitcoin prices have surged by more than 370%, prompting some creditors to question whether this approach truly compensates for their losses.
Despite the criticism, this move is seen as a crucial step toward restoring confidence in the crypto market, which was significantly shaken by FTX’s downfall. Anndy Lian, a blockchain expert, noted that the repayments could lead to diverse responses among investors.
“Smaller investors might sell for financial security, while others could hold onto their funds, betting on future growth,” Lian explained, referencing a similar scenario during the Mt. Gox bankruptcy. Many creditors of the Japanese exchange chose to retain their Bitcoin holdings, which have since appreciated in value by over 8,500%.
The timing of the repayments adds further intrigue. They coincide with the January 20 inauguration of U.S. President-elect Donald Trump, a date many industry watchers believe could signal regulatory clarity for digital assets. Speculation has also risen around the proposed Bitcoin Act, which aims to establish a BTC reserve for the US. Some experts predict this alignment of events could propel BTC prices past $200,000, further driving market activity.
The repayment process will involve prominent crypto exchanges like BitGo and Kraken, tasked with managing the distribution. If all eligible users file complete claims, the total payouts could reach $16 billion, creating what some analysts describe as a “significant liquidity event” for the crypto industry.
Meanwhile, legal proceedings surrounding FTX continue to unfold. The Justice Department is seeking the return of $13.25 million in political contributions linked to former FTX executives. Additionally, disputes over the sale of FTX EU, the exchange’s European arm, remain unresolved as the U.S. Bankruptcy Court in Delaware oversees the case.
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